Taking money out of your property company got more expensive on 6 April 2026

From 6 April 2026 the ordinary dividend rate rose from 8.75% to 10.75% and the upper rate rose from 33.75% to 35.75%. The additional rate is unchanged at 39.35% and the dividend allowance remains at £500. The change was announced at Budget 2025.

For a landlord who holds property personally, this changes nothing. For a landlord with a property company that pays out what it earns, it is a straight increase in the cost of getting money into their own bank account — and it arrives at exactly the moment the internet is telling landlords that incorporating is the answer to everything.

The two layers, in order

A property company is taxed twice, and both layers have to be in the sum.

Corporation tax first. From 1 April 2023 the main rate is 25% on profits over £250,000 and the small profits rate is 19% on profits at or below £50,000, with marginal relief between the two producing an effective marginal rate of 26.5%. Both limits are divided by the number of associated companies and pro-rated for short accounting periods.

The division by associated companies matters for landlords who use the classic structure of one SPV per property or one per lender. A landlord with four associated companies has a small profits limit of £12,500 and an upper limit of £62,500 in each of them, not £50,000 and £250,000. Profits that everybody assumed were taxed at 19% are in the marginal band.

Then extraction. Whatever survives corporation tax is taxed again when it comes out as a dividend, at 10.75%, 35.75% or 39.35% depending on the shareholder's other income.

An illustrative example with £10,000 of company profit

Follow £10,000 of property profit inside a company through both layers, for a shareholder who is already a higher-rate taxpayer. Ignore the £500 dividend allowance and any salary. The figures are illustrative and use 2026/27 rates.

• Corporation tax at the marginal 26.5%: £2,650, leaving £7,350.
• Distributed at the upper dividend rate of 35.75%: £7,350 × 35.75% = £2,627.63.
• In the shareholder's hand: £4,722.37 of the original £10,000 — a combined effective rate of about 52.8%.

On last year's rates the same £7,350 distributed at 33.75% cost £2,480.63 and left £4,869.37. The April 2026 change therefore costs £147 on every £10,000 of profit extracted this way. That is 2% of the post-corporation-tax figure.

Now compare the alternative. The same landlord holding the property personally as a higher-rate taxpayer pays 40% on £10,000 of taxable property profit and keeps £6,000. From 6 April 2027 the property higher rate becomes 42%, so they keep £5,800. At this profit level, personal ownership leaves the landlord with more money in hand than extraction from a company, on either rate.

Now do the same sum on retained profit

Leave the money in the company and the picture inverts.

• Company, profit retained, marginal band: £10,000 less £2,650 = £7,350 available to reduce debt, fund the next deposit or cover a refurbishment.
• Company, profit retained, small profits rate: £10,000 less £1,900 = £8,100.
• Individual, higher rate: £6,000 — and the individual pays that tax whether or not the money leaves the property business.

A property company is no longer a cheaper way to take the same money out. It is a cheaper way to keep money in. Every additional pound retained inside a company at 19% or 26.5% instead of taxed at 40% or 45% compounds into the next purchase. Every pound extracted now costs more than it did last year.

What changed on 6 April 2026

Section 24 still does not apply to companies. HMRC's Property Income Manual is explicit that companies carrying on a property business are not affected by the finance cost restriction, so mortgage interest remains fully deductible against company profits. For a heavily geared portfolio that is the single largest number in the comparison and the dividend rise does not touch it.

The April 2027 property income rates do not mention companies. Individuals, partnerships, trusts and estates move to 22%, 42% and 47%; companies stay on corporation tax. That widens the retention gap further from April 2027.

Getting into a company has not become cheaper. A transfer of property to a company you control is a disposal to a connected person at market value under sections 17 and 18 TCGA 1992, taxed at 18% or 24% unless incorporation relief under section 162 applies — and from 6 April 2026 that relief has to be claimed in the Self Assessment return for the year of transfer. It no longer applies automatically. Stamp duty is charged on market value under section 53 Finance Act 2003, with the 5-point additional dwellings surcharge and a 17% flat rate on any single dwelling over £500,000 unless a relief such as property rental business relief applies.

What to do this year

• Count your associated companies and recompute the corporation tax limits. Four companies means a £12,500 small profits limit each, and profits you thought were at 19% may be at 26.5%.
• Decide, deliberately, what the company is for. If the answer is income for you to live on, the arithmetic above is the arithmetic you are living with. If it is a growing portfolio funded from retained profit, the company is doing its job.
• Check which rate a dividend falls in once it is stacked on top of your other income. The £500 allowance is small enough that most of a distribution is taxed, and the difference between 10.75% and 35.75% is decided by the rest of your income, not by the company's.
• Plan extraction alongside the profit forecast, during the year, so the decision about a year that finished in December is not left until March.

The full company position — statutory accounts, corporation tax with the associated companies trap, directors' loans and the cost of taking money out — is on property company accounts, and accountants for property companies and SPVs covers how we work with landlords who already hold through a company. If you are still weighing the structure, read the incorporation guide before the incorporation calculator, because the guide contains the costs the calculator cannot know. This is general information and is not advice on your own structure.